The silly season is around the corner and while recovery from the global financial crisis is, well, not exactly in full swing… we thought it was time to deck the halls and address the vital question of what it takes to start a new business.
Much like the larger-than-life gift-wielding icon from the North Pole, many people question whether or not starting a new business on the back end of recession is a good idea … or the figment of over-excited entrepreneurial imagination?

Well in some ways it’s a better time and easier than it ever has been. The competition has been winnowed out, and many businesses are quieter and less obtrusive in their marketing. New technology options including the internet, e-marketing and outsourced suppliers offering SaaS (software as a service) make it possible for you to do a lot without raiding the bank.

Our ‘12 Days For A Start-Up’ lists core criteria for a business startup, and if you can satisfy them, there may well be a surprise under your tree come December.

‘1st Day’
Follow your passion.  The effort and energy required to run the business will only be worth it to you if you love what you’ve chosen to do.

‘2nd Day’
Research your market space and your competitors thoroughly. Be an expert on your industry, products and services, if you’re not already. Join related industry or professional associations before you start your business.

‘3rd Day’:
Test, retest and test again assumptions of why your target market will buy.

‘4th Day’
Get yourself a support system.  Don’t do it alone. A friend or family member is helpful for sounding off when things are tough. Better still find a business advisor or mentor.  One who can help you through the process and warn you of the pitfalls.

‘5th Day’
Write a business plan. Understanding your business and its goals will help you make the right strategic decisions. Lenders are more likely to lend when they can see a robust plan. It will also mitigate the likelihood that your time and money disappears into starting a business that will NOT succeed.

‘6th Day’
If you can, get clients or customers first. Do the networking. Make the contacts. Sell or even give away your products or services. You can’t start marketing too soon.

 ‘7th Day’
Line up the money. Lenders will want to see sturdy business plans, contingency fall- backs, evidence of likely success. Raise as much capital as you can. This is pretty tough in a credit crunch, but as anyone who has been through a building project knows, the budget always blows out. One option to consider is maintaining a part time or contract job while you start your business.  This will give you the funds to live on while you get the business on its feet.

‘8th Day’
Get the legal and tax issues right. It’s much more difficult and expensive to unsnarl a mess afterwards.  Get your accountant / business advisor involved closely on this. Make sure you learn what your legal and tax responsibilities are before you start your business and operate accordingly.

‘9th Day’
Be patient. It will take time. Estimate your planned time without financial returns - and double it.

‘10th Day’
Get professional help. You’re not an expert at everything. Hire the expertise you need – accounting, bookkeeping, legal and so on.  Don’t waste time and money on jobs you’re not qualified to do.

‘11th Day’
Be professional. Get your business stationery lined up, business phone numbers and a dedicated email address.  People like to do business with professionals, so make sure your small business seems as organized, courteous and efficient as any larger established organization.

‘12th Day’
Prepare to cope with unexpected changes. Be flexible about redirecting your strategy.

Have a happy and safe holiday season and in the coming year keep a look out for your business silver lining.

There have been recent increases in business and consumer confidence in many developed economies and expectations are growing that the worst of the global financial crisis and its associated recessions may be over. However, the optimism is mixed with caution. 

Consumers are looking for good value at a lower price and businesses are exploring ways to use new strategies and technology to invest less and get a higher return. 

If you’re an SME business looking to work smarter at lower cost, consider these strategies.

Social networking

Traditional marketing can be expensive. Many businesses are using the internet to reach a large customer base at low cost.

Facebook now has 250 million members, and writers such as USA Today’s Jon Swartz suggest this has serious implications for business – both big and small. More than 100,000 small businesses are present on Facebook and 10,000 websites use Facebook Connect, which facilitates information sharing about sites. Facebook and other social networking sites such as MySpace also provide businesses with a low cost way to build business relationships.

Social networking sites also provide opportunities for viral marketing. Small businesses could use a variation on the strategy that Ford used when it launched the Fiesta into the American market. It let 100 bloggers drive the car for six months, provided that they wrote about it and uploaded monthly videos onto YouTube.

Some businesses are writing their own blog or using Twitter. The audience is limited to readers interested in your message. It’s a powerful form of relationship marketing that is cheaper than traditional methods such as newsletters or fliers.

Forming alliances

A US National Small Business Association survey found that 27% of business owners planned to form strategic alliances over the next year. It is partly a matter of cost-saving, something that can be important at a time when small businesses may be having trouble with cash flow or raising finance. The Wall Street Journal reports on a website business that, rather than pay for advertising and PR, bartered services by building websites for their marketers. Other businesses are joining forces to share expertise and workload.

Remote working and outsourcing

WorldatWork reports that the number of people working remotely at least part of the time increased 39 percent between 2006 and 2008. During tough economic times, you may not want to use higher pay to attract or retain talented staff. However, you might be able to keep them in a non-monetary way. The internet makes remote working an increasingly feasible. It’s not for everyone, as it requires a results-based work culture. It’s also a way to reduce some costs, such as office space.

At a time when small businesses are reluctant to hire, it’s now possible to outsource professional services through the internet at a relatively low cost. Over 60,000 companies source professional services through websites such as Elance. They also provide an opportunity to outsource globally, not just locally.

Outsourcing IT

Hiring server capacity can be a cheaper option than running all applications from your own server. Only two per cent of businesses with under 100 employees currently do this but 37 per cent are interested in the idea, according to a Forrester Research report. BusinessWeek reports that businesses can currently outsource not only to large market players (such as Google, Amazon or Microsoft) but to many small ‘cloud computing’ service providers.

Pro bono work

If you’re working at less than full capacity, pro-bono work may be a way to not only keep staff occupied but build a presence in your local community. The Wall Street Journal reports on this as a customer relationship building trend that can also be linked in with low-cost marketing; businesses could upload videos to You Tube, documenting the pro-bono work.

Rebalancing product mix

A June Accenture study found that 67 per cent of consumers expected to be cautious about spending for up to three years. But people still want their little touches of luxury so find ways to offer these ‘treats’. Accenture reports for instance that while sales at premium coffee outlets have fallen, they have risen for some less fashionable vendors who sell more cheaply. Inexpensive treats such as the simple chocolate bar also seem to be faring well.

Cash flow problems are a common enough experience, but many businesses fail to acknowledge that there is a full blown cash crisis looming on the horizon.
Like the tsunamis we seem to be hearing about more frequently in the last few years, often the disaster is compounded by the fact that people fail to read the signs and don’t take prompt steps to avoid catastrophe.  Unlike the less fortunate tsunami victims, the warning signs for your business can usually be read in sufficient time to act upon before it sinks between the tidal wave of creditors and mounting debt.

The two main causes of cash flow difficulties are business growth and working capital disruptions.

Even a profitable business can have cash flow troubles.  A big uptake in sales can mean a sudden gap between the funds going out to meet the demand for goods and services and the payments coming in.

Most worrying though is the situation when the company's receivables are actually less than its payables. If the business is running at a deficit unless there's a new infusion of cash, a significant increase in sales, or a reduction in expenses, the company risks collapsing.

The key thing to remember is that the underlying cause of cash flow problems is the need to pay creditors sooner than debtors are paying you.
Whichever the cause of the cash flow issues in your business, you need to monitor constantly and watching for the warning signs of impending problems.

Here are some of the warning signs to watch for:

• Sales are slowing. Your regulars are reducing on frequency and amount of expenditure with you. Success rates with winning new custom are declining.
• Bank balances are shrinking. Perhaps you had the slack in the past to handle the situation when receivables were slow coming in, but now your balances are lower than usual, and show little sign of improving.
• Inventory turnover is sluggish, and so it is not generating profit.
• You are falling behind in paying your invoices.  Businesses generally pay employees first, and suppliers to ensure orders can be filled, but they might postpone paying statutory fees because this will not prevent them doing business in the short term. Once a business starts stretching its trade creditors beyond normal terms then its cash flow problem is usually quite serious. 
• Lack of funds is impacting on your capacity to replenish necessary inventory or preventing major purchases, such as equipment or software.
• Business loan creditors are becoming edgy. They call frequently and perhaps start wanting to see your current financials.

Run your cash flow budget forecasting regularly. Like the earthquake prediction centeres, it’s your early warning system.  At the first sign of problems take prompt steps to reduce the outflow of money and increase monies coming in. There's always something you can do to move your business to safer high ground.

Running regular financial forecasting against your business budget is the vital first step in the process.  Analyze your end-of-month or even weekly financials comparing the actuals with your budget to see where you are performing well and where there are shortfalls.

The early warning signs of potential cash flow problems do vary across different industries, as do the solutions. Talk to your accountant /business advisor if you need assistance in structuring a business plan that allows for proper forecasting and contingency planning.  And you shouldn’t hesitate to contact them early if you need help and ideas for managing the situation to ensure your business stays afloat.

Poor relationships within the team will always reflect on morale and have been proven to impact on the bottom line.  You can make or break a career or a job depending on the way you behave with fellow workers.  Workplaces need to be profitable for businesses and for the people in them – and that means personally and financially.

Whether you are a leader or a team member there are actions you can take to create a positive, empowering, motivational work environment for people.

A CEO complained that his managers only brought him problems. When you come to the meeting with a problem, have some suggested solutions ready at the same time.  The negative effect simply complaining disappears, and is replaced with an atmosphere of constructively sharing in resolving issues.

Constantly laying the blame on someone or something else is negative and often destructive of team spirit. Don’t put your effort into finding ways to point the finger at others. People are more likely to recognise their contribution to the problem if they are not publicly humiliated in the process.  You will alienate others and end up with enemies, not conducive to your future job prospects or your business’ success.

It’s not just what you say; it’s also how you say it, and the message that your body language conveys. Apparently polite words won’t cover up for disrespectful or rude actions; sarcasm, shouting and other aggressive behaviours are never acceptable communication methods.

The middle of an important meeting with clients or senior managers is never the right time to reveal problems that your co-worker, boss, or reporting staff person is not aware of. Sometimes called ambushing, no-one wants to be humiliated by learning of problems for the first time in a public forum.  They won’t respect or trust you in the future.

Be reliable. Keep your commitments. Like the walls of the honeycomb, we are interconnected in a business.  If you miss your deadlines, it will impact on the work of others. If you can’t meet a deadline, let others know quickly so that alternative arrangements can be prepared.

Be generous and share credit for accomplishments, ideas, and contributions. When you think about it, virtually everything we achieve comes about as a result of input of some kind from others. Thank people, and acknowledge their contributions. Employees and co-workers will be more motivated to share ideas with you and contribute to your projects (and to your success).

Everyone has something to offer if we encourage them to share it. The growth of one person benefits the whole group. So compliment, praise, notice the efforts people make.

For employment and industry trends check http://www.rileyguide.com/trends.html

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

All rights to the content in this publication are reserved by Bullseye. Any use of the content outside of this format must acknowledge Bullseye or its licensee RAN ONE as the original source.